A new investigation by The Washington Post shows that hundreds of people in Washington, D.C. are losing their homes over tax debts that often total less than $200. Host Michel Martin speaks with investigative journalist Michael Sallah, about how tax lien sales are forcing elderly homeowners onto the streets.

MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE from NPR News. Later this hour, two stories that suggest that hair has a weightier topic than many people might think. We'll speak with a man who had to take his seven-year-old out of school because she wore dreadlocks and we'll find out why the president of Venezuela is pressing the police to do something about hair thieves. That's coming up later.

First, we want to focus on a story about a business practice that's pushed many vulnerable people out of their homes. According to a series of investigative reports published in The Washington Post this week, hundreds of D.C. homeowners lost their houses over the sale of tax liens since 2005. That's the year The Post chose as a starting point for their investigation. Some of these tax debts were for as little as $50 - others were just a few hundred dollars. But after investors bought the liens from the city a number of them started charging homeowners thousands of dollars in legal fees - many times more than the original tax debt. And when homeowners could not pay, they lost their homes. This series has already provoked a strong reaction from readers, so we've called investigative journalist Michael Sallah, one of the lead writers, to tell us more. And he's with us now, welcome. Thanks so much for joining us.

MICHAEL SALLAH: No, glad to be here.

MARTIN: What first brought this issue to The Post's attention?

SALLAH: Well, I think all the foreclosure crisis had played out and then we started to see this other crisis emerging. And it involved poor people. And it involved small amounts of money. So as we started to dip into it a little bit more we found that a lot of the tax liens being imposed on homes in D.C., the nation's capital, were for meager amounts. We're talking somewhere between $44 - three, four - $400 - and they were losing their homes over them. So we decided to kind of get into this industry, learn more about it. How widespread is it? How long has it been going on and why is it going on?

MARTIN: Why in Washington, D.C.? I mean, one of the points that you make in this series is this is not something that's happening everywhere. It is something that's happening in other places, but it seems to be a particularly significant practice in this jurisdiction and that's notable to a lot of people I think because a lot of people think of this as a particularly politically liberal jurisdiction with very strong labor laws, very strong landlord-tenant, you know, protections. And so I think a lot of people would be puzzled to say, how is this possible?

SALLAH: No, D.C. is a candy store for the tax lien industry, and the reason why is that your real estate here holds its value. This isn't Cleveland. It's not Baltimore. It's not Toledo. It's not Detroit. It's Washington. Your dips and turns have been far less than they have in other places. So, if they can get a house here, it has value. And that's ultimately the goal - is not necessarily to take the homes - but if they can't get what they want, in terms of attorney fees and all the assortments of monies that they can get out of these liens, they'll take the house.

MARTIN: How does exactly did this work? I think a lot of people cannot understand how a retired former Marine...

SALLAH: Sure.

MARTIN: ...Right, who's paid for his house in cash...

SALLAH: Right.

MARTIN: ...Could lose his house over a debt of less than $200...

SALLAH: Sure.

MARTIN: ...Which is one of the stories in your series.

SALLAH: It was $134. Yeah.

MARTIN: $134. In another case, a woman lost her house over a $44 debt...

SALLAH: Yeah, Daisy Dolsey.

MARTIN: ...How is that possible?

SALLAH: What happens is, if people get older and they forget to pay their tax bills - sometimes they end up in nursing homes or assisted living facilities - what happens is, you don't pay your taxes, the district will come in - like 28 other states across the country that have the same program - and they will impose a lien on your property. If you don't pay off your taxes in a certain period of time, they will then sell that lien in an auction that enter then all the tax lien industry companies. They come in. They bid for these liens. They swoop them. They buy them up. And what happens in the district - unlike other places that have consumer protections - once these tax lien companies get the lien, they can come back to you and say, OK, I'm going to turn that $40 debt into a $4,000 debt.

MARTIN: How can they turn a $40 debt, or a $200 debt into a $4,000 debt?

SALLAH: They start imposing fees - attorney fees, title searches. They'll start court costs - all the different things that they do when they file a motion to file for foreclosure.

MARTIN: Is this legal?

SALLAH: It is legal. Unfortunately, it's like a stick-up without a gun. It's a situation where they can now gouge you. Most of it's very boilerplate - paralegals can do the work. They can send the notices out and such, but what you end up doing is you have lawyers that charge $450 an hour. So now they're imposing massive fees on top of little debts. Bennie Coleman paid his taxes. Ultimately, he couldn't pay the legal fees. That's why he lost the house.

MARTIN: If you're just joining us, we are talking about an investigative series published in The Washington Post this week. It details how the sale of tax liens has led to foreclosure for hundreds of homeowners. Our guest is Washington Post investigative journalist Michael Sallah. He is one of the lead writers on this series. You noted in the series that some of these companies who were bidding on these tax liens had criminal backgrounds, or had criminal records, that they had been convicted...

SALLAH: Yeah.

MARTIN: ...Of bid rigging...

SALLAH: Right.

MARTIN: ...And other unlawful practices...

SALLAH: Right.

MARTIN: ...In other places. Is there any consequence to them?

SALLAH: No. They're still allowed in - one or two of them are still back in the game. They were convicted. One served a prison sentence. They paid their fines and they're back in business again. There was no consequences as far as banning them from the industry.

MARTIN: Were there common threads between the neighborhoods where this was going on and the homeowners who were affected? I mean, The Post makes the point that this happened all over the city, but are there places that - or people to whom this happened more than others?

SALLAH: Yeah, of course. I mean, they have the 8 - Ward 8 and Ward 7. I mean, your poorest neighborhoods. You know, the poor people...

MARTIN: For people who don't live in this area, what does that mean?

SALLAH: Those are your low income areas, areas where there's lots of seniors. A lot of them have owned their homes for generations, sometimes even inherited their homes, but they fell behind. They lost jobs. They can't keep up. People that had serious mental health issues, and so because of that and for not of that, they lost their home.

MARTIN: One of the points that you make in the series, though, is that many of these people had already owned their homes.

SALLAH: Correct.

MARTIN: I mean, I think some people listening to this would say, well, aren't the taxes paid in the mortgage payment? Well, a lot of these people owned their homes free and clear.

SALLAH: That is correct.

MARTIN: So they would never have received a mortgage payment. And I think other people might ask, you know, the question of, well, if the district considers this a predatory practice, why didn't they impose a cap on fees? Could they do that?

SALLAH: Yeah, they could've, and they've known about the problem for a long time. But at the end of the day, it clears the books for them, and the district open their arms to them.

MARTIN: The other point that you make in this series, that in some cases, these were mistakes. That people in fact had paid the taxes. They should not have gone into foreclosure. How does the district explain that? How do city officials explain that there were instances in which people in fact had paid the taxes or they applied the tax payment to the wrong house or they never actually sent these notices to the right addresses, that they sent them to wrong - in one case, to a vacant lot? How did district officials respond to that when you ask them about this?

SALLAH: I think their position is they've tried to lower that number and they have. Actually, last year, it was less. Their error rates, or mistake rates, are still triple or quadruple what they are in other places. They don't have really much to say, I think, on some of those. What they'll tell you is that we process thousands and thousands of tax accounts every year. We're going to make some mistakes. Unfortunately, their mistakes can cost people a home. They can cost people grueling and long court battles to win back their liens. And in talking to other places - Prince George's County, Montgomery - areas outside of D.C. proper, you will find that that error rate is less than 1 percent. It's really all you ask of your government is just, take my check and apply it to my taxes, right? But people aren't that lucky.

MARTIN: You've gotten a strong reaction from city officials. I note that the mayor of Washington, D.C., Vincent Gray, said that he was appalled by what he read. But what's he going to do about it?

SALLAH: Well, they're proposing emergency reforms. They're on the table. They could be addressed as early as next week, on putting a cap on attorney fees. They would put a limit on the amount of liens that they can take. The limit of a tax debt that they would put a lien on would be $2,000. I think they've also talked about helping, having putting together payment plans and not allowing homes to be taken from elderly seniors, low income seniors and also low income disabled people. See, none of those protections exist currently today - not those. You got to have those. People fall through the cracks, otherwise.

MARTIN: What kind of reaction are you getting to the series?

SALLAH: Oh, it's amazing. I think that the level of outrage that a man could lose his house over $134, or a 95-year-old church choir leader, Daisy Dolsey, could lose her home over $44 - essentially a shortfall on her account that her family never knew. They paid the taxes, but they said, you still owed $40. It was the response from the head of the tax lien program.

The top-level person for the city that surprised us when he said, she was $40 shortfall, the foreclosure was proper. I think when you get to that level, when you can just say, bag it for $40, you got to think to yourself, are we doing all that we could be doing to help the people that fall through the cracks? For $40, a woman has to lose her house that's been in her family for 50 years. She's in a nursing home, by the way. She had no idea it was lost, and her family doesn't want to tell her.

MARTIN: What would you say to people, though, who argue - I mean, you did have an interview with one city official who works in the tax office who said, well, look, this is just the way we have to get the taxes paid. If people don't pay their taxes, this is the only way we get the money. What...

SALLAH: Well, I think, in fairness to them, they're saying, look, this is the law we've been dealt with. This is the law we have. This is the law that's on the book, and so we administer that law. We're not going to cut any corners here. I think, at the end of the day, if they could just get it right, if they could get the liens on the right properties, if they could even credit the right accounts, I think that people would be much further ahead today.

MARTIN: You know, often when people cover these stories, you know, you're seeing thousands and thousands of documents. I note that The Post reported this series over the course of 10 months...

SALLAH: Correct.

MARTIN: ...And that you looked at, you know, thousands of documents in the course of this and looked at - in depth - at, what, like, 500 cases in depth, or, like, what?

SALLAH: We found 500 foreclosures.

MARTIN: You found 500 foreclosures...

SALLAH: Foreclosures, yeah.

MARTIN: ...That were due to these...

SALLAH: Yeah.

MARTIN: ...You know, tax liens, and this is in a relatively short period of time. What was the one that you can't stop thinking about?

SALLAH: Bennie Coleman, a retired Marine Sergeant who served in Vietnam, clearly has severe dementia - to lose his home over $134 - that began with a $134 tax debt. There's something wrong in our society when that happens, particularly in the nation's capital. Here's a man who served his time, 20 years. They called him Tops. He was a retired Master Sergeant from the Marines and I think he deserved better at this time, at this point in their lives.

MARTIN: Michael Sallah is an investigative reporter at The Washington Post. If you want to read the series of articles that we've been talking about, we'll link to them on our website. Go to NPR.org. He was kind enough to join us from our studios in Washington, D.C. Michael Sallah, thanks so much for speaking with us.

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